PEABODY, Mass., June 04, 2018 (GLOBE NEWSWIRE) -- Analogic Corporation (Nasdaq:ALOG), enabling the world's medical imaging and aviation security technology, today announced results for its third quarter ended April 30, 2018.         

Highlights during the third quarter included:

  • Revenue of $120 million with gross margin of 44%
  • GAAP operating margin of 6%; Non-GAAP operating margin of 13%
  • GAAP diluted EPS of $0.56; Non-GAAP diluted EPS of $1.08
  • Operating cash flow of $22 million
  • Signed merger agreement to be acquired by affiliate of Altaris Capital Partners

Revenue for the third quarter of fiscal 2018 was $120.0 million, a decrease of 2% compared with revenue of $122.2 million in the third quarter of fiscal 2017. GAAP net income for the third quarter of fiscal 2018 was $7.1 million, or $0.56 per diluted share, compared with a net loss of $(59.7) million, or $(4.78) per diluted share, in the third quarter of fiscal 2017. Included in GAAP net income and diluted EPS for the third quarter of fiscal 2017 were impairment and restructuring related charges totaling $75.2 million, or $5.40 per diluted share, primarily due to the Ultrasound business restructuring initiative and the 2017 restructuring plan.

Non-GAAP net income for the third quarter of fiscal 2018 was $13.6 million, or $1.08 per diluted share, compared with $10.0 million, or $0.79 per diluted share, in the prior year's third quarter. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

For the first nine months of fiscal 2018, revenue totaled $356.0 million, down 5% from the same period in the prior fiscal year. Fiscal year-to-date GAAP net income was $19.3 million, or $1.53 per diluted share, compared with a net loss of $(49.6) million, or $(3.98) per diluted share, from the same period in 2017. Included in GAAP net income and diluted EPS for the first nine months of 2018 is a provisional $5.8 million income tax expense, or $0.46 per diluted share, for the one-time transition tax associated with the Tax Cuts and Jobs Act of 2017 that was signed into law in late 2017 in addition to the $2.4 million of non-cash inventory impairment charges described above. Included in GAAP net income and EPS for the first nine months of fiscal 2017 were impairment and restructuring related charges of $75.7 million, or $5.43 per diluted share, primarily due to our Ultrasound business restructuring initiative, the 2017 restructuring plan, and the Oncura contingent consideration adjustment.

Year-to-date non-GAAP net income was $38.9 million, or $3.08 per diluted share, compared with $27.9 million, or $2.20 per diluted share, in the same period last year. A reconciliation of GAAP to non-GAAP results is included as an attachment to this press release.

Fred Parks, president and CEO, commented, “Our preparations to complete the previously announced transaction with Altaris Capital Partners are on track. We look forward to providing what we believe is the most attractive combination of value and certainty to shareholders upon the close of the transaction, and continuing to deliver innovative technology to our customers.”

Segment Revenues for the Third Quarter of Fiscal 2018
Medical Imaging segment revenue was $61.4 million for the third quarter of fiscal 2018, down 12% from revenue of $69.5 million in the same period of fiscal 2017, primarily due to lower sales in CT. Lower sales in MR and mammography were offset by favorability in Motion Controls.

Ultrasound segment revenue was $42.2 million for the third quarter of fiscal 2018, up 21% from revenue of $34.8 million in the same period of fiscal 2017, due to continued strong sales growth in North America and Europe. Revenue growth was partially offset by the comparative lower revenue from discontinued system sales.

Security and Detection segment revenue was $16.4 million for the third quarter of fiscal 2018, down 8% from revenue of $17.9 million in the same period of fiscal 2017, mainly driven by lower shipments of airport checked baggage systems.

Conference Call Details
The Company does not plan to host a conference call to review the results of the quarter.

Use of Non-GAAP Financial Measures
We supplement our GAAP financial reporting with certain non-GAAP financial measures, including non-GAAP operating income, non-GAAP operating margin, non-GAAP other income and expense, non-GAAP net income, non-GAAP effective tax rate and non-GAAP diluted earnings per share. These measures are not presented in accordance with, nor are they a substitute for, U.S. generally accepted accounting principles, or GAAP. In addition, these measures may be different from non-GAAP measures used by other companies, limiting their usefulness for comparison purposes. The non-GAAP financial measures should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. We have included at the end of this document a reconciliation of each historical non-GAAP financial measure used in this document to the most directly comparable GAAP financial measure.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, in forecasting and planning for future periods, and in determining payments under our compensation programs. We also believe that non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results and in comparing financial results across accounting periods and to those of other companies.

Forward-Looking Statements
Any statements about future expectations, plans, and prospects for the Company, including statements containing the words "believes," "anticipates," "plans," "expects," and similar expressions, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including risks relating to product development and commercialization, limited demand for the Company's products, limited number of customers, risks associated with competition, uncertainties associated with regulatory agency approvals, competitive pricing pressures, downturns in the economy, the risk of potential intellectual property litigation, acquisition related risks, and other factors discussed in our most recent quarterly and annual reports filed with the Securities and Exchange Commission. In addition, the forward-looking statements included in this presentation represent the Company's views as of the date of this document. While the Company anticipates that subsequent events and developments will cause the Company's views to change, the Company specifically disclaims any obligation to update these forward-looking statements. These forward-looking statements should not be relied upon as representing the Company's views as of any later date.

About Analogic – Celebrating 50 Years of Imaging Innovation

Analogic (Nasdaq:ALOG) provides leading-edge healthcare and security technology solutions to advance the practice of medicine and save lives. We are recognized around the world for advanced imaging and real-time guidance technologies used for disease diagnosis and treatment as well as for automated threat detection. Our market-leading ultrasound systems, led by our flagship BK Ultrasound brand, used in procedure-driven markets such as urology, surgery, and point-of-care, are sold to clinical practitioners around the world. Our advanced imaging technologies are also used in computed tomography (CT), magnetic resonance imaging (MRI), and digital mammography systems, as well as automated threat detection systems for aviation security. Analogic is headquartered just north of Boston, Massachusetts. For more information, visit www.analogic.com.

Analogic and the globe logo are registered trademarks of Analogic Corporation.

CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited)
           
           
   Three Months Ended Nine Months Ended
(In thousands, except per share data)  April 30, 2018 April 30, 2017 April 30, 2018 April 30, 2017 
           
Net revenue:          
   Product     117,156 $  120,791 $  349,599 $  371,373 
   Engineering     2,815   1,371 $  6,419   3,448 
Total net revenue     119,971   122,162   356,018   374,821 
Cost of sales:          
   Product     64,576   68,667   192,904   210,149 
   Engineering     2,466   1,334   5,554   3,180 
Total cost of sales     67,042   70,001   198,458   213,329 
           
Gross profit    52,929   52,161   157,560   161,492 
Operating expenses:          
   Research and product development     15,285   14,900   45,927   46,962 
   Selling and marketing     13,530   16,356   39,131   51,894 
   General and administrative     16,824   10,377   40,864   27,978 
   Restructuring     (21  2,080   710   2,379 
   Asset impairment charges    -   73,051   -   83,474 
Total operating expenses     45,618   116,764   126,632   212,687 
           
Income from operations     7,311   (64,603  30,928   (51,195)
Total other income (expense), net    328   57   1,504   (357)
Income before income taxes     7,639   (64,546)  32,432   (51,552)
Provision for income taxes     529   (4,882)  13,115   (1,934)
Net income (loss)  $  7,110 $  (59,664)$  19,317 $  (49,618)
           
Net income per share          
   Basic   $  0.57 $  (4.78)$  1.55 $  (3.98)
   Diluted   $  0.56 $  (4.78)$  1.53 $  (3.98)
           
Dividends declared and paid per share  $  0.10 $  0.10 $  0.30 $  0.30 
           
Weighted-average shares outstanding:          
   Basic     12,503   12,486   12,489   12,457 
   Diluted     12,633   12,486   12,617   12,457 


CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
    
(In thousands)   
    
Assets:April 30, 2018 July 31, 2017
   Cash and cash equivalents$  123,939 $  129,298
   Short-term marketable securities  62,587   18,797
   Accounts receivable, net  84,865   77,587
   Inventory  132,240   130,575
   Other current assets  11,400   14,448
      Total current assets  415,031   370,705
   Long-term marketable securities  35,765   26,171
   Property, plant, and equipment, net  97,076   102,676
   Intangible assets and goodwill, net  24,354   28,269
   Other non-current assets  7,843   10,262
      Total Assets$  580,069 $  538,083
    
Liabilities and Stockholders' Equity:   
   Accounts payable$  37,738 $  27,179
   Accrued liabilities  33,168   31,619
   Other current liabilities  9,674   8,312
      Total current liabilities  80,580   67,110
   Long-term liabilities  16,301   10,479
   Stockholders' equity  483,188   460,494
      Total Liabilities and Stockholders' Equity$  580,069 $  538,083


NON-GAAP STATEMENTS OF OPERATIONS RECONCILIATION
         
(In thousands, except per share data)Three Months Ended Nine Months Ended
 April 30, 2018 April 30, 2017 April 30, 2018 April 30, 2017 
         
GAAP Income (Loss) From Operations$  7,311 $  (64,603)$  30,928 $  (51,195)
      Share-based compensation expense (Note 1)  2,247   2,195   6,128   6,355 
      Acquisition-related revenues and expenses (Note 2)  1,413   (23)  4,336   (3,876)
      Non-routine other legal costs (Note 3)  4,071   8   4,725   24 
      Restructuring (Note 4)  (21  2,080   710   2,379 
      Asset impairment charges (Note 5)  -   73,051   -   83,474 
Non-GAAP Income From Operations$  15,020 $  12,708 $  46,827 $  37,161 
      Percentage of Total Net Revenue12.5% 10.4% 13.2% 9.9% 
         
GAAP Other Income (Expense), net $  328 $  57 $  1,504 $  (357)
      Acquisition-related revenues and expenses (Note 2)  3   -   3   - 
Non-GAAP Other Income (Expense), net$  331 $  57 $  1,507 $  (357)
      Percentage of Total Net Revenue0.3% 0.0% 0.4% -0.1% 
         
GAAP  Tax Provision (Note 6)$  529 $  (4,882)$  13,115 $  (1,934)
      GAAP Tax Rate6.9% 7.6% 40.4% 3.8% 
Non-GAAP  Tax Provision (Note 6)  1,758   2,803 $  9,461 $  8,877 
      Non-GAAP Tax Rate11.5% 22.0% 19.6% 24.1% 
         
GAAP Net Income (Loss)$  7,110 $  (59,664$  19,317 $  (49,618)
      Share-based compensation expense (Note 1)  1,683   1,453   5,061   4,310 
      Acquisition-related revenues and expenses (Note 2)  1,159   338   3,537   (1,410)
      Non-routine other legal costs (Note 3)  4,184   433   4,650   443 
      Restructuring (Note 4)  (15)  1,367   502   1,557 
      Asset impairment charges (Note 5)  -   -   13   - 
      Valuation Allowance Tax Effect (Note 6)  156   -   (5  - 
      Transition Tax Impact (Note 6)  (684)  66,035   5,798   72,645 
Non-GAAP Net Income$  13,593 $  9,962 $  38,873 $  27,927 
      Percentage of Total Net Revenue11.3% 8% 10.9% 7.5% 
         
GAAP Diluted EPS$  0.56 $  (4.78$  1.53 $  (3.98)
      Effect of non-GAAP adjustments$  0.52 $  5.57   1.55   6.19 
Non-GAAP Diluted EPS$  1.08 $  0.79 $  3.08 $  2.20 
 
Note 1: Exclusion of variable share-based compensation expense allows consistency of operating results between periods and other companies.
 
Note 2: During fiscal years 2017 and 2018, we incurred acquisition costs related to the Ultrasonix Medical Corporation, PocketSonics, Inc., and Oncura Partners Diagnostics, LLC acquisitions, which we closed on March 2, 2013, September 20, 2013, and January 8, 2016, respectively. Costs included the amortization of intangibles of $1.4 million and $4.3 million for the three and nine months ended April 30, 2018, respectively. Costs also included in the adjustment for a decrease in the contingent consideration accrual of $2.1 million and $10.2 million for the three and nine months ended April 30, 2017, respectively.
 
Note 3: During the three and six months ended January 31, 2018, we incurred $4.1 million and $4.7 million, respectively, of pre-tax strategic alternative related costs. Additionally, during the three and nine months ended April 30, 2018, we incurred $0 of pre-tax inquiry-related costs, associated with the BK matter, as initially disclosed in our annual report on Form 10-K for the fiscal year ended July 31, 2011. This matter relates to transactions we identified involving our Danish subsidiary, BK Medical, and certain of its foreign distributors, regarding compliance with the law.
 
Note 4: During the three and nine months ended April 30, 2018, we incurred pre-tax charges of ($21) thousand and $710 thousand, respectively, primarily due to facility exit costs associated with exiting the Vancouver facility.
 
Note 5: As a result of continuing losses in the Oncura business and the related business outlook, the Company evaluated the net realizability of all of the related assets at December 31, 2016. As a result, the company recorded a pre-tax asset impairment charge of $73.1 million and $83.5 million for the three and nine months ended April 30, 2017 , primarily associated with the write-down of the Oncura and Ultrasound goodwill and net intangibles to its estimated fair values.
 
Note 6: The quarter to date Q3 FY 2018 non-GAAP tax rate differs from the GAAP tax rate primarily due to the transition tax impact from the 2017 Tax Reform Bill, acquisition related adjustments and stock compensation expenses. The quarter to date Q3 FY 2018 non-GAAP tax rates differ from the GAAP tax rates primarily due to the transition tax impact from the 2017 Tax Reform Bill, acquisition related amortization expenses and stock compensation expenses.

For Further Information:

Investor and Financial Media Contact:
Mark Namaroff
Senior Director of Investor Relations and Corporate Communications
(978) 326-4058
investorrelations@analogic.com